Co-Living Company Quarters Raises $300M To Fund U.S. Expansion
Quarters, a subsidiary of Germany-based Medici Living Group, announced on Wednesday that it has secured $300M in funding from a combination of Medici and W5 Group, the family office of Ralph Winter. The money will be spent over the next three years to launch co-living locations in New York, Washington, D.C., San Francisco, Los Angeles, Chicago, Boston, Philadelphia, Denver, Austin, Seattle and Miami. Quarters already has two locations open in New York and one in Chicago.
The specific location of any forthcoming spaces has not been disclosed yet, but signings will be "announced on a monthly basis," Medici and Quarters CEO Gunther Schmidt told Bisnow.
The $300M investment comes on the heels of $1.1B Quarters raised for expansion in Europe, and is based on future fundraising over the course of the next few years, according to the release. Last year, Medici hired away a former Pret a Manger executive to guide its U.S. expansion.
Schmidt cited Quarters' fundraising ability as the basis of his ambition to turn the company into "the WeWork of co-living." He might be facing stiff competition from the coworking giant he name-checked after WeWork split its own co-living arm WeLive into an independent division under its new organizational structure under The We Company moniker. The move could signify a renewed commitment to co-living, which has seemed to be only an intermittent interest of WeWork's leadership in the past few years.
Schmidt said his company is looking for either ground-up development, as its Chicago location was, or conversions of older buildings, like it has done in New York. For redevelopments, Quarters targets either older vintage multifamily buildings or former office buildings, with natural light a priority, Schmidt says.
Quarters is looking to locate near downtown in cities with a metro population of at least 1 million people, according to Schmidt.
For cities like Philadelphia, where its Center City business district is also its most popular area for multifamily, more central locations would make sense. The South Broad Street corridor was historically prime office real estate, but has fallen out of favor and seen vacancy rates rise dramatically in recent years, according to JLL Research Director Lauren Gilchrist. Some outdated office buildings are potential redevelopment targets, whether by Quarters or a more traditional multifamily company.
In terms of project size, a range between 20K SF and 75K SF is where Quarters is targeting, with the goal of housing between 80 and 300 residents. In markets with higher demand, the company would consider spaces big enough to fit 500 people, Schmidt said. All told, Quarters expects this round of expansion to add 1,300 units to its portfolio.